Will the EU be forced to review UCITS liquidity requirements?

Follows criticism from UK regulators

European law makers could be forced to make changes to the UCITS directive later this year amid criticism from UK regulators of weaknesses in the fund structure, which contributed to the gating of the Woodford Equity Income fund, according to regulatory experts.

Potential changes to the EU directive could include a review of the 10% limit imposed on illiquid assets held within a fund or see regulators re-categorise funds with illiquid holdings as complex, imposing new restrictions on their marketing and distribution. UCITS funds make up 76% of the retail fund market, according to the European Commission, with around €10trn of total assets. UK regulators have criticised UCITS as too "rules-based", leading to questions as to whether the UK could revamp its own rules after it leaves the European Union and build a more "principles-based" regulato...